In mid 2009, the Eleventh Judicial Circuit of Florida (Miami-Dade County), in an effort to help alleviate the foreclosure sale backlog, began selling foreclosed properties online via a website. Traditionally, foreclosure sales were held live and in-person at 140 West Flagler Street. However, the live auction was far less efficient and resulted in fewer sales than could be had in an online setting. Thus, the change.
As a practical matter, most professionals involved feel that moving the sales online was a positive move. It has increased the pace at which properties can be sold and is beginning to alleviate the backlog of cases in the county. However, there are some unintended consequences and there is questionable legality in how some of the sales were taken online.
The main unintended consequence is that where there were once 250 registered bidders for foreclosure auctions in Miami-Dade County, there are now over 2,500. Why is this a problem? Well, many of the bidders are less-than-savvy real estate investors who may not realize what they are buying. For example, I know of one such investor who purchased a single family home for $10,000 only to discover that he had purchased a condo lien. This meant that his ownership was “subject to” a first mortgage, which happened to be for an amount larger than the value of the property. In essence, he bought a property that was “upside-down” and didn’t know it. This scenario has repeated itself many times. Most people (including many homeowner’s associations) will probably say: “BUYER BE WARE”. After all, it’s a free market.
However, there is a larger problem with the legality of some of these sales. When the administrative order setting judicial sales online was signed, it directed that all sales then pending be moved to the website. Presumably the Clerk of Courts sent every homeowner whose property was set for sale a card informing them of the change. The problem is, the administrative order acted to amend the judgment that set the sale in the first place and it did so without a hearing. That is, the homeowner was denied their day in court.
The reality is, most homeowners would probably not have a basis to challenge the sale in this circumstance. Short of having shown up to 140 West Flagler Street with the money to satisfy or reinstate their mortgage and having been denied the opportunity to do so, there would be no real damage to such a person. As such, any challenge to the administrative order would be a waste of time and resources.
So, what lessons do we learn from this? Well, the courts have made it abundantly clear that it is the responsibility of every person involved in litigation to know their rights and responsibilities. It matters not whether you are represented by an attorney. The courts hold every party to the same legal standard. Indeed, the courts in many cases give borrower’s the benefit of the doubt in terms of giving them extra time by extending sale dates. But greater concessions than this are generally not offered and are certainly not required. In short, if you or someone you know are in foreclosure, higher a lawyer or know the law.